Globalization and Russian Reluctance Globalization

Globalization and Russian Reluctance Globalization - Russia Fails Embrace Opportunities Globalization: the new world system that emerged after the Cold War, according to the book, Russia's Food Policies and Globalization, is "a process by which technological, political, economic and cultural dimensions interconnect individuals, governments, and business firms across borders" explains author Stephen K. Wegren in Russia's Food Policies and Globalization (Wegren 154).

And when it comes to the globalization of world economies, how is Russia doing 15 years after the collapse of the old Soviet Union? There was much fanfare and there were well publicized high hopes world-wide that when Russia rejected its communist-style dictatorship, this enormous, sprawling nation would become a pivotal part of the global economy. Globalization seemed a perfect fit and appeared to be a desirable goal. Russia is indeed a sprawling nation, with a total land area of 16,995,800 square kilometers (10,560, 700 square miles).

As of July, 2005, an estimated 143,420,309 people live in Russia according to The World Factbook (www.cia.gov/cia/publications/factbook/geos/rs.html).With all those resources and that huge population, Russia hasn't come close to living up to the promise many in the international community held out for it. An article in the Nixon Center Bulletin (www.nixoncenter.org) ten years after the fall of communism indicates that instead of assertively moving into a global economy, Russia has taken "one step forward and two steps back" (Saunders, 2001).

One possible explanation for Russia's tardiness into the global marketplace was put forward by economist / journalist Thomas Friedman; paraphrased in the Nixon Center Bulletin, Friedman claims that "the unstoppable flow of information across national borders is exposing a larger and larger share of the world's population to the West's prosperity." Hence, Russians who witness this prosperity on TV and the Internet, are creating "domestic pressures for economic growth that can only be met with massive foreign investment." And that massive foreign investment depends the existence of economic and political institutions within Russia that are "hospitable" to a global investors.

The need for a fertile economic environment - prior to luring deep-pocket investors - also goes hand-in-hand with an element of respect in the international marketplace. Russia doesn't have that respect yet. Indeed, on the subject of respect, Russia has been attempting accession to the World Trade Organization (WTO) since 1995, and it's been a long process, but Russia is not there yet.

Prior to investing millions in a country that has not even gained entrance into the WTO, the only international body dealing with the rules of trade between nations, a foreign corporation would need to do a lot of nit-picking research. The situation in Russia is still shaky politically and economically. It is true that Russian economic production and exports in the past few years have been on the rise, but much of that is due to oil production.

So, if the question is, should a foreign business consider investing in Russia, then the answer has to be: "maybe," or a cautious "perhaps" - under carefully controlled conditions - or just "no." Globalization, while helping other nations economically, is apparently not on Russia's radar screen quite yet.

Meanwhile, Vladimir Putin - who became Russian Prime Minister in 1999, and was elected president in the spring of 2000 - has appeared to embrace antiglobalization policies, according to Yale University's online portal (http://yaleglobal.yale.edu).In recent years, officials in Russia have "consistently implemented policies that seem to correspond with the philosophies of anti-or-alter-globalization" (Proskuryakova, 2004).

The Yale piece offers common critiques of globalization to illustrate their point; one, Putin has been shutting off tax havens on Russian soil, and he attacked the Russian oil giant Yukos, after it merged with another big oil company in Russia, Sibneft. It seems that right after the newly merged companies had agreed on a major investment from a U.S.-based oil giant, Putin had the newly merged corporation investigated for tax and economic fraud.

And when Putin arranged for the Yukos' CEO, Mikhail Kodorkovsky -considered a likely opponent to Putin in the next presidential election - to be arrested following the investigations, it did not send a positive signal to other would-be global investors in Russia. Again, Russia showed it either did not wish to play in the world of globalization, or it just fumbles the ball every time it has an opportunity to score.

Indeed, following the "debacle" that resulted in the imprisonment of Kodorkovsky, "sizable losses" were suffered "for Russian companies' stocks on national and foreign stock exchanges, as well as certain downsizing of foreign direct investments due to high political risks," the Yale writer explains.

Another viewpoint as to why Russia stumbles in the globalization game comes from Alexey Portanskiy, Head of the WTO Information office on Russia's accession to the WTO; one main reason Russia has not made it into the WTO (aside from the general reluctance on the part of Russian society to open up), Portanskiy asserts, is "the resistance of sluggish bureaucracy and lack of political commitment from the top" (Portanskiy, 2005) (World Trade Organization).

But the Yale article claims that entrance into the WTO has been postponed partly because Putin has been "crossing swords" with the World Bank, the International Monetary Fund, and the WTO. Between 2000 and 2004, "Putin has persistently refused to borrow from these institutions," Proskuryakova writes. "Putin's tough stand was made possible," at least from his point-of-view, "by high oil prices in international markets," which allowed him to embrace an ambitious plan for re-payment of Russian debt.

That policy has caused the above-mentioned international financial institutions to "reconsider the extent of their presence in Russia," the Yale journalist, Proskuryakova, concludes. The interesting sidebar story to Putin's refusal to borrow is that he had in fact able to boost Russian currency reserves from "slightly above $88 billion to over $95 billion, in a period of three months in 2004.

And while that growth in currency reserves would logically be met with praise from the international community, in this case critics were not lining up to praise Putin because, Proskuryakova continues, they were "skeptical of Putin's underlying motives." Along with the refusal to borrow from international institutions - and by doing so presenting a better picture to would-be global investors - Putin cut "a wide range of social entitlements, such as healthcare, and distributed cash payments for poor and socially vulnerable groups as compensation." Once again, the answer to the question of why Russia has not played a solid hand in the globalization game can be found.